Nov. 1 is the beginning of open enrollment — the period when people can sign up for new health insurance plans in the health insurance marketplace created by the Affordable Care Act (ACA). Many private employers hold their annual enrollment periods at the same time. On this date, millions of people all over the country begin shopping for insurance.
It can be a complicated process. There are many factors to consider when choosing a health insurance plan, including the monthly premium, the out-of-pocket costs, and the network of available providers, such as doctors and hospitals. Even experts sometimes find it hard to sort it all out.
To make sense of it all, you need to tackle the job systematically. Work your way through step by step, beginning with a grounding in the basics of how health insurance and health insurance marketplaces work. From there, you can move on to comparing different types of plans, costs, and coverage.
Step 1: Understand Health Insurance Costs
All health insurance plans work on the same basic principle. You pay a monthly fee, called a premium, to the insurance company. It pools the money from all its customers’ premiums and uses it to pay a portion of their health care costs as needed. As long as the amount it pays out is less than it collects in premiums, the company makes a profit.
To make sure their costs stay below their earnings, health insurance plans require their customers to cover some of their own care costs. In addition to your monthly premium, your costs can include:
Deductible
Your health insurance plan’s deductible is an amount you must pay entirely out of your own pocket before your insurance starts to pick up the tab. For example, if your plan’s deductible is $1,000, you must pay 100% of your medical expenses until your bills total $1,000. After that, your health coverage kicks in.
Coinsurance
Even after you reach your deductible, you typically have to pay a portion of your health care costs. In some cases, the insurance company pays a percentage of each bill and you pay the rest. Your share is called coinsurance. For example, if your plan has 20% coinsurance, you pay $40 of a $200 doctor bill and the insurer pays $160.
Copayments
Instead of coinsurance, some companies charge you a fixed amount for any covered medical service. For example, you might pay $25 to see your primary care physician, $50 to see a specialist, and $10 for prescription drugs.
This fee is called a copayment, or copay. In most cases, you pay it upfront when you receive care. The rest of the bill goes to the insurer.
Out-of-Pocket Maximum
There’s one more figure that’s critical to consider: your out-of-pocket maximum. It’s the highest total amount you can spend on all your health care costs in a year — deductibles, copayments, and coinsurance.
Once you reach this limit, your insurance company picks up all your care costs for the rest of the year. However, premiums don’t count toward this limit. Neither do services not covered by your insurance plan.
For example, let’s say that at the beginning of your plan year, you find out you need a knee-replacement surgery that costs $30,000. Your plan has a $1,500 deductible, 20% coinsurance, and a $2,200 out-of-pocket maximum.
After paying your deductible, your 20% coinsurance totals $5,700. But because your out-of-pocket maximum is set at $2,200, you pay only an additional $700. The insurance company covers the rest.
Step 2: Figure Out Where to Shop for Health Insurance
The first step in shopping for a health plan is figuring out where you need to shop and when. The marketplace you use determines your health insurance options: types of plan, levels of coverage, and costs.
Places to look for health coverage include:
Your Employer
Many Americans with health insurance get it from an employer. Some workplaces offer only one health plan. Others have several plans to choose from, sometimes from multiple health insurance companies.
If you’re self-employed or your job doesn’t provide health benefits, you may be able to get coverage from your spouse’s or partner’s employer. If you’re age 25 or younger, you can get coverage as a dependent on a parent’s plan, even if you no longer live with your parents.
You don’t have to sign up for a workplace health plan just because you’re eligible for one. You’re allowed to shop around for a better deal on federal, state, or private health marketplaces.
However, for most people, an employer’s plan is the cheapest way to get health coverage. For one thing, insurance premiums for workplace plans tend to be lower than those for individuals. Also, most businesses reduce the cost further by picking up part of the tab for their employees. Some employers subsidize health insurance costs for employees’ spouses and children as well.
The Federal Health Marketplace
If you can’t get health coverage from an employer, the first place to look for it is the federal health insurance marketplace at HealthCare.gov. Through this site, the government makes plans from private insurance companies available to the public.
The marketplace can also help you figure out whether you qualify for subsidies to lower your insurance premiums’ cost. If you do, it automatically applies the subsidy to any plan you purchase. Alternatively, it can tell you whether you or your family members qualify for other government plans like Medicaid or the Children’s Health Insurance Program (CHIP).
In most cases, you can shop for a marketplace health plan only during the open enrollment period. For 2022, this period runs from Nov. 1, 2021 to Jan. 15, 2022. However, you must enroll by Dec. 15, 2021 to get coverage that starts by Jan. 1, 2022.
However, you can sign up for a marketplace plan at other times if you’ve just gone through a life event that dramatically changed your circumstances. Examples include losing your job (and your health coverage with it), getting married, or having a baby.
State Health Marketplaces
Some states run their own separate health exchanges. These state marketplaces sell health plans for individuals, families, and sometimes small businesses. Some states have longer enrollment periods than the federal health exchange, so you might have extra time to enroll depending on where you live.
If you live in one of these states, visiting HealthCare.gov will automatically redirect you to the website for your state’s health exchange.
Medicare
If you’re a senior citizen, your best bet for coverage outside the workplace is Medicare. This plan is available to Americans who are over 65 or disabled — even if they’re still working.
Medicare isn’t a single plan with the same coverage for everyone. Medicare customers can choose traditional Medicare, which covers hospitalization (Part A) and doctor visits (Part B), and add a separate plan to cover prescription drug costs (Part D). They can also add a Medicare supplement insurance policy, also known as Medigap, to help cover out-of-pocket costs.
Alternatively, customers can opt for a Medicare Advantage plan. It provides all-in-one coverage for Parts A, B, and usually D. Most Medicare Advantage plans also include other benefits, such as dental or vision coverage.
You can review your choices and costs for all these types of plans at Medicare.gov. Open enrollment for all plans runs from Oct. 15 through Dec. 7 each year. If you’re already enrolled in a Medicare Advantage plan, you can change to a new plan or switch to traditional Medicare between Jan. 1 and Mar. 31.
Military Health Plans
Members of the United States military and their families get full health coverage through Tricare. This program includes several plans. Depending on where they serve, active-duty military members must sign up for one of the following:
- Tricare Prime
- Tricare Prime Remote
- Tricare Prime Overseas
- Tricare Prime Remote Overseas
Their family members can choose from one of these plans or another plan available to military families, such as Tricare Select or Tricare Young Adult. The Tricare website has tools to help you find the right plan for you and your family. Retired service members and their families can also purchase health insurance plans through the Tricare site.
Veterans not enrolled in Tricare can apply for the veteran health care program through VA.gov. With certain exceptions, this program is open to people who served at least two years in the armed forces. The VA website can also help spouses and dependents of veterans determine whether they qualify for care under various government programs.
Other Sources of Insurance
These markets are the main places to shop for health insurance, but they’re not the only ones. For instance, you can also choose to buy your care directly from an insurer, shop on a private exchange, or shop through an insurance agent.
Shopping for Insurance on the Private Market
One advantage of shopping privately is that you can sign up for a plan at any time rather than waiting for the open enrollment period. However, one big disadvantage is that plans bought directly from insurers or through insurance agents aren’t eligible for subsidies.
Using the Consolidated Omnibus Budget Reconciliation Act (COBRA)
If you’ve recently lost your job but want to keep your health care plan, you can do this through the Consolidated Omnibus Budget Reconciliation Act, or COBRA. However, you must pay for the full cost of the plan yourself with no help from your employer. In most cases, it’s cheaper to buy a plan through the health insurance marketplace, especially if you qualify for subsidies.
Step 3: Understand Your Plan Options
Once you’ve figured out where you need to shop for insurance, you can start looking at different plans. There are many types of health plans with an alphabet soup of names, such as HMO, PPO, and POS, all of which provide different amounts and types of coverage.
To understand which type of plan is right for you, you first have to understand what each one covers and which health care providers it allows you to see.
Fee-for-Service Plans
This type of plan is just what it sounds like. Your insurance company pays your health care provider a fee for each service you receive, from an office visit to a surgical procedure. You can receive medical care whenever and wherever you want, with no prior approval or referral needed.
The downside of this type of plan is it comes with much higher monthly premiums than other plans. Also, these plans sometimes require you to pay the full cost of medical services upfront, then submit a claim to your insurance for reimbursement. And these costly plans are not generally available in the health insurance marketplace.
HMOs & EPOs
Health maintenance organizations, or HMO plans, require you to receive care only from providers within the plan’s network. Out-of-network care is covered only in emergencies.
HMO plans typically focus on preventive care and wellness. They require you to choose a primary care physician (PCP) who coordinates all your care. You must see your PCP first for any problem, and they determine whether you need to see a specialist. If you do, the PCP provides a referral to a doctor in the HMO network.
HMOs are the most restrictive type of health plan. However, they balance that by offering low out-of-pocket costs for care.
An exclusive provider organization (EPO) is like an HMO but with less of a focus on primary care. You must still use only in-network providers, except in emergencies. However, you’re allowed to see any doctor within the network without a referral.
PPOs & POS Plans
With a preferred provider organization (PPO), you pay less for care from providers within the network, but you still receive some coverage for out-of-network care. That allows you to see any doctor you choose without a referral. PPOs generally have higher premiums and out-of-pocket costs than HMOs and EPOs.
A point-of-service (POS) plan is like a PPO but with a stronger focus on primary care. You must choose a primary care physician, who must provide referrals for any other provider you visit.
High-Deductible Health Plans
A high-deductible health plan, or HDHP, is technically not a separate type of plan. It can be any of the types listed here, but it also comes with a high deductible you must cover out of pocket. Because they keep the insurance company’s expenses down, these plans typically have very low premiums.
You can pair some HDHPs with health savings accounts (HSAs). An HSA is a special savings plan you can use to pay for health care costs with pretax dollars. Some individuals offer HSAs to their employees. If yours doesn’t, you can purchase one from a provider such as Lively.
Not every plan with a high deductible qualifies as an HDHP. You must look specifically for plans labeled “HSA-eligible.”
According to the IRS, for the year 2022, an HDHP must have an annual deductible of at least $1,400 for a person and $2,800 for a family. However, it also must limit out-of-pocket expenses (including the deductible) to $7,050 for a single person and $14,100 for a family.
Step 4: Understand Plan Costs and Coverage
Even within the same type of plan, there’s a lot of variation. Two different HMO plans, for instance, can provide different amounts of overall coverage. They can also differ in the amount of coverage they provide for non-essential health care benefits.
These variations between plans make a big difference in their cost. In general, the less coverage a plan provides, the lower the premiums will be. It’s up to you to figure out what balance between protection and price is right for you. (Introduce section)
Levels of Coverage
There are two ways for an insurance company to make a profit. It can sell you a plan with low premiums that requires you to cover more of your care costs through deductibles and coinsurance. Or, it can charge you a higher premium for a plan with lower deductibles and coinsurance.
Public health exchanges make it easy to sort health care plans based on premiums and coverage. They sort the majority of plans into four tiers: bronze, silver, gold, and platinum. The higher-tier gold and platinum plans charge higher monthly premiums and cover more of your medical expenses. The lower-tier bronze and silver plans have lower premiums and higher out-of-pocket costs.
There’s one other type of plan available in the health insurance marketplace: catastrophic health plans. These plans have very low monthly premiums and very high deductibles — $8,700 for the year 2022.
Catastrophic plans are available only to people under age 30 or people who can show they can’t afford one of the higher-priced metal plans. You can’t use premium tax credits to help pay for these plans. If you qualify for a tax credit, a subsidized bronze or silver plan is probably cheaper.
Although some workplace health insurance plans also use these metal tiers as identifiers, they don’t have to. If your employer’s plans aren’t sorted by tier, it’s a bit tougher to compare them. You have to look at each plan’s details separately to figure out how its premium costs balance out against the level of coverage it provides.
Coverage for Other Health Care Costs
Note that even the highest-tier plans don’t necessarily cover all types of medical costs. Under the ACA, also known as Obamacare, all plans must cover essential health benefits, such as hospitalization, preventive care, prescription drugs, and mental health. However, costs like dental care and vision care are not always covered.
If the individual plan you choose doesn’t cover these costs, you can shop for a separate dental insurance or vision care plan to help with these expenses. But these plans have their own monthly premiums, so you have to factor in that expense when comparing costs.
One expense health insurance plans don’t cover is the cost of long-term care — for example, in a nursing home or assisted living facility. To protect yourself from this cost, you must purchase a separate long-term care insurance policy.
The premiums for this type of insurance depend on your age and health at the time you first apply for the policy. According to the American Association for Long-Term Care Insurance, the best time for most people to apply is in their mid-50s.
Step 5: Compare Available Plans
Even if you’re happy with your current health insurance coverage, shop around to see what else is available. It’s possible the cost or coverage of your current plan has changed for the upcoming year. And you may have better options available that weren’t on the market last time you checked.
Now that you have a good understanding of health insurance marketplaces, plan types, coverage, and costs, you can compare specific plans. Look at the list of plans available from your employer or the public marketplace and see how they stack up in the areas that count.
Plan Benefits
All ACA-approved plans have to cover 10 types of essential care. However, only some plans cover services considered nonessential. These include acupuncture, chiropractic care, orthotics, and hearing aids.
If you require any type of care not on the essential list, look for a plan that covers it. This information should appear in the plan’s summary of benefits, which you can view in most online marketplaces.
Note that even if your plan covers a nonessential benefit, it may have a lifetime benefit maximum. That’s a cap on the amount it will pay out for this type of care over your lifetime. Check the lifetime benefit maximum for any services you use and consider whether it’s likely to be enough to meet your needs.
Also, while all plans must cover prescription drugs, not all plans cover the same drugs. If you’re taking a particular medicine, you can enter it when shopping on HealthCare.gov or your state health marketplace to look for plans that cover it.
Plan Network
If you have a doctor you really like, look for a health plan that includes that doctor in its network. Each plan should include a provider directory you can check to see which doctors the network includes.
You can also enter the name of a preferred provider, such as a doctor or hospital, when browsing on HealthCare.gov and some state health insurance marketplace. The site will then show you only plans that provider accepts.
Note that even if your doctor is listed as an in-network provider, that doesn’t mean you’ll pay the lowest price when seeing them. Some networks are “tiered,” so you pay more to see doctors in the network’s outer tier than those in the inner tier. If possible, choose a plan that has your favorite doctor in the inner tier.
If you don’t have a preferred doctor, look for a plan with a large network that will give you more providers to choose from. That’s especially crucial if you live in a rural area or a sparsely populated suburb since it increases the chances of finding a doctor near you.
Plan Type
Along with the network itself, consider how much coverage you have for seeing a doctor outside it. If you travel a lot or have complicated health problems that require a lot of specialist visits, you might need to see out-of-network doctors fairly often. In that case, you’re better off with a PPO or POS plan that lets you see any doctor you choose.
On the other hand, if you hardly ever see any doctor other than your primary care physician, an HMO or EPO could be a better choice for keeping your out-of-pocket costs low.
Coverage Level
A lower-tier bronze or silver plan makes most sense if you’re young and reasonably healthy. Since you’re not likely to need a lot of care, you won’t have to pay high deductibles or coinsurance, so it makes sense to keep your premiums low.
If you’re older or in poor health, it makes more sense to opt for a higher-tier gold or platinum plan. Although these plans charge higher premiums, they also limit your out-of-pocket costs for care.
Plan Quality
Some health insurance plans are better than others. To help you compare them, HealthCare.gov offers quality ratings for all its marketplace health insurance plans. Each plan receives an overall quality rating of 1 to 5 stars (5 is the highest rating) based on:
- Member Experience: Members’ satisfaction with their doctors, care, and the ease of getting services
- Medical Care: How well providers in the plan’s network keep their patients healthy by offering health screenings and vaccinations, supplying basic care, and monitoring patients’ conditions
- Plan Administration: How well the plan is run, including customer service, access to information, and appropriateness of the tests and treatments ordered by network doctors
Some plans don’t have star ratings because they’re new or have low enrollment. Don’t take the absence of stars as a sign of poor quality.
When you’re shopping for care from your workplace or a private network, comparing plans is harder. But you can check health plan report cards from the National Committee for Quality Assurance. This nonprofit has rated over 1,000 health care plans based on customer satisfaction and outcomes for preventing and treating disease.
Step 6: Compare Total Plan Costs
You may find there’s only one available health plan that really works for you. However, if you still have several options to choose from, there’s one more critical factor to consider: cost. That means not just the monthly premium but also the total cost of the plan over a whole year, including premiums and out-of-pocket costs.
Total plan cost can be hard to estimate since you don’t know what your medical expenses will be in the next year. HealthCare.gov and some state marketplaces have tools that make it easier. These tools ask you to rate health care usage for each family member as high, medium, or low. They then estimate the total yearly cost for each plan based on its deductible and copays.
If you’re shopping in a health care marketplace without this feature, you can estimate your medical expenses based on your overall health and habits. If you’re young and in good health, you probably won’t need to see a doctor often, so your out-of-pocket costs are likely to be low. However, they could be much higher if:
- You make frequent visits to a PCP, a specialist, or the emergency room
- You take expensive or brand-name medications regularly
- You have young children or are expecting a baby
- You have a surgery scheduled soon
- You have a chronic condition such as cancer or diabetes
If this seems too hard to figure out, just add up the annual premiums and out-of-pocket maximum for each plan. That’s the most you could possibly have to pay for your care within a given year. If that total is more than you could afford to pay, you know you need a plan with more coverage.
As you compare costs, watch out for plans that seem too good to be true. Some plans advertised online aren’t ACA-compliant and don’t provide all the types of essential health coverage required under the law. Even on the public marketplaces, some plans that look very cheap have extremely high deductibles or copays.
Step 7: Choose the Right Plan for Your Needs
Once you’ve reviewed all your health insurance plan options and their costs, making your final decision becomes simple. The right health insurance plan for you is the one that meets your needs for the lowest cost.
All you have to do is sign up. Just remember to cancel your old plan so you don’t end up paying two sets of premiums.
If you’re still having trouble choosing the right plan or signing up for it, talk to a health insurance assister. These are individuals trained to help people apply for and enroll in subsidized health plans and apply for federal programs like Medicaid and CHIP. Their service is free, and their advice is fair and impartial.
To find a health insurance assister in your area, visit the Find Local Help page on HealthCare.gov. If your state has its own health insurance marketplace, search the site for “assisters,” “navigators,” or “assistance.”
Final Word
Sometimes, there’s no way to find a plan that meets all your needs and still fits your budget. For instance, some people can’t find affordable care for their family because of the Obamacare family glitch. Others fall into the Medicaid coverage gap, which bars people from receiving health care subsidies if their income is below the official poverty line.
If you can’t find a plan in your price range, there are alternatives to help you cover some of your health care costs, at least temporarily. For example, short-term health insurance plans provide partial coverage for a limited period of time.
Health care sharing ministries (HCSMs) allow people with a common faith to band together and help each other with medical bills. And direct primary care provides unlimited in-office care from one doctor in exchange for a monthly fee.
However, these alternatives aren’t the same as health insurance. They’re better than nothing, but they don’t truly protect you from catastrophic medical costs. So a real health insurance plan is always the best choice if you can afford it.
